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Start-ups, New Business Employment, and the Effects on Incumbents: Who Contributes the Larger Share?

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  • Michael Fritsch

    () (Friedrich Schiller University Jena, School of Economics and Business Administration)

  • Florian Noseleit

    () (Friedrich Schiller University Jena, School of Economics and Business Administration)

Abstract

We investigate the effects that new business formation has on employment in incumbent firms and compare it to the development in the start-ups. The analysis is performed for West German regions over the 1984-2002 period. It shows that the employment effects of new businesses on the incumbents are significantly positive. Moreover, we find indication that these effects on incumbents are considerably larger than the employment that is directly generated in the start-ups. We draw conclusions for policy and for further research.

Suggested Citation

  • Michael Fritsch & Florian Noseleit, 2008. "Start-ups, New Business Employment, and the Effects on Incumbents: Who Contributes the Larger Share?," Jena Economic Research Papers 2008-068, Friedrich-Schiller-University Jena.
  • Handle: RePEc:jrp:jrpwrp:2008-068
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    More about this item

    Keywords

    Entrepreneurship; new business formation; regional development; direct and indirect effects;

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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